"Double-Sided Shareholder Primacy": Even More Powerful Corporate Governance Machine in China than the United States?

This article examines the emergence of a “double-sided shareholder primacy” in China’s corporate governance, contrasting it with the U.S. “single-sided shareholder primacy”. While the U.S. emphasizes shareholder interests as the corporate purpose but centralizes governance power in boards, China’s system uniquely combines shareholder-centric corporate objectives and concentrated shareholder control, reinforced by a more powerful “Corporate Governance Machine.” This machine integrates legal transplants (e.g., extreme shareholder meeting authority), ternary controllers (state, family, and minority stockholders), cultural ideologies favoring power concentration, and political metaphors likening meetings of shareholders to sovereign bodies. Despite its entrenchment, China’s 2024 Company Law revisions reveal efforts to curb shareholder overreach by introducing board-centric governance, mirroring U.S. director-decision making centric. While China’s “double-sided” model entrenches shareholder dominance more powerfully than the U.S., its effectiveness is increasingly questioned, prompting regulatory recalibration toward balancing stakeholder interests.